Monday, March 28, 2011

Do I really need project management?

Let’s continue with the house example except this time instead of being a homeowner I am a builder. Let’s suppose I am a small “mom and pop” and not Lennar. For several decades after the Great Depression and before the Great Recession small builder all across the Country would buy a lot, build a house and sell for enough profit to stay in business. These builders did not use project management tools to build these homes, they did not need to because they had experience and always made enough profit to get along.
Then came the Great Recession and many of them lost money or went out of business because the losses were too great. The ones that did survive and are still in business having been waiting on the sidelines, wondering is it safe to get back in the game?
You see in 2005 the builder had profits of 25-50%, he did not have to worry about details that much, everything “always” worked out in the end. But now his profit margin might be 7-9% if his very careful with expenses. 
This where project management comes in, not only can tools like Net Present Value or Return on Investment help you determine if you can make a profit with your next project but other tools that can help to manage Risk and Time to avoid costly mistakes or delays.
These tools primarily help you manage two this things, cost or time. I think cost is the easiest to manage because cost is usually fixed or accurately estimated. Time-lines on the other hand can be greatly affected by many things such as weather, supplies, and many other inter-dependencies.
In comes the Gant chart here we divide our project into segments using milestones and charting inter-dependencies that we can easily monitor. When a milestone is not met early in the project, we can easily make adjustments or corrections that keep us on track.

Friday, March 25, 2011

What do you want to do? Project Scope

I cannot over state how important this step is.
Before we begin a project we need to now what we want to do. Not just a general idea but very precisely what we intend to do or accomplish. In Project Management we call this Scope. The more detail we have the better chance we have of ending up with a product we and more importantly the customer will be happy with. Let's use the construction of a house as an example. I can say my family needs a house but this is extremely vague. I can say my family wants a 3 bedroom, 2 bathroom house. This is a little better. But what we really want is: I would like you to design and build a 3 bedroom, 2 bathroom house for my family. I would like it to be wood frame construction, in a bungalow style and the cost including land can not exceed $175,000. I would like it to have about 2000 square feet and a backyard large enough for a pool. Additionally it needs to be located in the 33155 zip code and I would like you to start construction within 30 days of my approval of the design and be completed in 120 days after the start. Please provide me a design within next two weeks, I will in turn return it to you within a week later with my changes if any. This is a good start but still in a real project I would want even much more detail, the more the better.....

Thursday, March 24, 2011

Project Managments Basics Day 1

I just started this blog to share some of my experiences with art of managing projects. Project management is also a science which has many tools for handling project deadlines, risks, calculating costs and managing resources. I will be sharing these with you and hopefully you find the information beneficial, good night for now....